Weekly Market Insights

Feb 7, 2023 11 min read

The Markets (as of market close February 3, 2023)

Just when investors saw a glimmer of hope that the Fed would soften its rate-hike policy, the January labor figures came out showing a massive job increase coupled with moderated wage growth. The latest employment data is evidence of a labor market that has withstood the Fed's actions thus far and could encourage a more aggressive response by the central bank as it attempts to drive down inflation. Despite a late-week slide, stocks ended the week mixed, with the Nasdaq, the Russell 2000, and the S&P 500 posting gains, while the Dow, and the Global Dow lost ground. Ten-year Treasury yields inched higher and the dollar advanced. Gold prices, which had been on an upswing, fell to under $1,900.00 per ounce. Doubts about increased eand from China and concerns about rising interest rates sent crude oil prices lower last week.

Investors turned cautious last Monday ahead of the Federal Reserve's meeting and a slew of big-tech earnings reports. The Nasdaq suffered its worst day since December 22, falling 2.0%, while the S&P 500 lost 1.3%, marking its worst daily performance since mid-January. Declines in a couple of mega-cap tech stocks dragged both indexes lower. The remaining benchmark indexes listed here didn't fare much better. The Russell 2000 slid 1.4%, while the Global Dow and the Dow dipped 0.8%. Ten-year Treasury yields added 3.3 basis points to reach 3.55%. Crude oil declined nearly $2.00 to $77.78 per barrel. The dollar advanced against a basket of currencies. Gold prices fell 0.4% to $1,938.70 per ounce.

Stocks closed January on an uptick, with each of the benchmark indexes listed here posting solid gains. The Russell 2000 jumped 2.5% by the close of trading, followed by the Nasdaq (1.7%), the S&P 500 (1.5%), the Dow (1.1%), and the Global Dow (0.4%). Treasury yields on 10-year notes slipped 2.2 basis points to close at 3.52%. Crude oil prices rose 1.6%, reaching $79.12 per barrel. The dollar fell, while gold prices advanced.

Last Wednesday saw stocks climb higher after the Federal Reserve scaled back its interest-rate hikes (see below) and indicated that inflation may be slowing. The Nasdaq jumped 2.0%, well ahead of the other benchmark indexes listed here. The Russell 2000 gained 1.5%, the S&P 500 advanced 1.1%, the Global Dow added 0.9%, and the Dow ended the day flat. Bond prices climbed higher, with the yield on 10-year Treasuries falling 13.2 basis points to 3.39%. Crude oil prices slid 2.5%, landing at $76.94 per barrel. The dollar declined, while gold prices increased 1.2% to $1,967.70 per ounce.

Stocks continued to rally last Thursday, as investors clung to hopes that the Fed is on track to loosen its fiscal tightening policy. Both the Nasdaq and the S&P 500 have enjoyed the best three-session rally since November. The Nasdaq gained 3.3%, the Russell 2000 climbed 2.1%, the S&P 500 advanced 1.5%, and the Global Dow increased 0.3%. Only the Dow failed to advance, dipping 0.1%. Ten-year Treasury yields were flat by the end of Thursday's session. Crude oil prices fell for the second straight day, declining to $76.00 per barrel. The dollar rose, while gold prices fell nearly 1.0%.

A robust jobs report sent stocks reeling last Friday, with each of the benchmark indexes listed here closing the session in the red. The Nasdaq lost 1.6%, followed by the S&P 500 and the Global Dow, which fell 1.0%. The Russell 2000 declined 0.9% and the Dow dipped 0.4%. Ten-year Treasury yields added 13.6 basis points to hit 3.53%. Crude oil prices continued to slip, falling to $73.24 per barrel. The dollar rose 1.2%, while gold prices slid 2.7%.

Market/Index

2022 Close

Prior Week

As of 2/3

Weekly Change

YTD Change

DJIA

33,147.25

33,978.08

33,926.01

-0.15%

2.35%

Nasdaq

10,466.48

11,621.71

12,006.96

3.31%

14.72%

S&P 500

3,839.50

4,070.56

4,136.48

1.62%

7.73%

Russell 2000

1,761.25

1,911.46

1,985.53

3.88%

12.73%

Global Dow

3,702.71

4,004.70

3,990.44

-0.36%

7.77%

Fed. Funds target rate

4.25%-4.50%

4.25%-4.50%

4.50%-4.75%

25 bps

25 bps

10-year Treasuries

3.87%

3.51%

3.53%

2 bps

-34 bps

US Dollar-DXY

103.48

101.92

102.96

1.02%

-0.50%

Crude Oil-CL=F

$80.41

$79.46

$73.24

-7.83%

-8.92%

Gold-GC=F

$1,829.70

$1,928.20

$1,878.90

-2.56%

2.69%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week's Economic News

  • Following its meeting last week, the Federal Open Market Committee voted to increase the target range for the federal funds rate 25 basis points to 4.50%-4.75%. In support of its decision, the Committee pointed to modest growth in spending and production, robust job gains, and a low unemployment rate, while noting that inflation had eased somewhat but remained elevated. The FOMC anticipates more interest-rate increases in the future until it feels that inflation has returned to the Committee's goal of 2.0% over time. However, the FOMC indicated that it would continue to assess economic information in determining whether to adjust its current monetary policy. In addition, following its meeting, Federal Reserve Chair Jerome Powell said, "we can now say for the first time that the disinflationary process has started."
  • Employment rose by a whopping 517,000 new jobs in January, according to the latest report from the Bureau of Labor Statistics. January's job gains exceeded the 2022 average monthly gain of 401,000. Job growth was widespread in January, led by gains in leisure and hospitality, professional and business services, and health care. Employment also increased in government, partially reflecting the return of workers from a strike. Both the unemployment rate, at 3.4%, and the number of unemployed persons, at 5.7 million, changed little in January. The unemployment rate has shown little net movement since early 2022. In January, both the labor force participation rate, at 62.4%, and the employment-population ratio, at 60.2%, were unchanged. In January, average hourly earnings rose by $0.10, or 0.3%, to $33.03. Over the past 12 months, average hourly earnings have increased by 4.4%, down from 4.9% for the 12 months ended in December. The average workweek rose by 0.3 hour to 34.7 hours.
  • The Job Openings and Labor Turnover Summary for December, released February 1, 2023, revealed that the number of job openings rose to 11.0 million, up from the November total of 10.4 million. The number of job openings in December is the highest monthly total since July. In December, the largest increases in job openings were in accommodation and food services (+409,000), retail trade (+134,000), and construction (+82,000). The number of job openings decreased in information (-107,000). December saw hires increase by 131,000 to 6.2 million, while total separations increased 59,000 to 5.9 million.
  • Manufacturing continued to decline in January, according to the latest release of the S&P Global US Manufacturing PMI™. Purchasing manager survey respondents noted a sharp contraction in new orders, while input and output costs increased as price pressures strengthened. Job growth slowed as new orders waned and backlogs declined. Overall, the purchasing managers' index posted 46.9 in January, marginally higher than the December reading of 46.2.
  • The services sector followed manufacturing, falling sharply in January, according to the S&P Global US Services PMI™. Like manufacturing, weak domestic and foreign demand led to declines in new business and new export orders. At the same time, cost inflation picked up for the first time in eight months.
  • Regular retail gas prices continued to rise across the country last week, according to the U.S. Energy Information Administration. The national average retail price for regular gasoline was $3.489 per gallon on January 30, $0.074 per gallon above the prior week's price and $0.121 higher than a year ago. Also, as of January 30, the East Coast price increased $0.082 to $3.466 per gallon; the Gulf Coast price dipped $0.041 to $3.133 per gallon; the Midwest price climbed $0.078 to $3.382 per gallon; the West Coast price increased $0.077 to $4.085 per gallon; and the Rocky Mountain price advanced $0.110 to $3.544 per gallon. Residential heating oil prices averaged $4.657 per gallon on January 30, $0.044 below the previous week's price but $0.881 per gallon more than a year ago.
  • For the week ended January 28, there were 183,000 new claims for unemployment insurance, a decrease of 3,000 from the previous week's level. This is the lowest number of initial claims since April 2022 and the fifth straight week of declines. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended January 21 was 1.1%, unchanged from the previous week's rate, which was revised down by 0.1 percentage point. The advance number of those receiving unemployment insurance benefits during the week ended January 21 was 1,655,000, a decrease of 11,000 from the previous week's level, which was revised down by 9,000. States and territories with the highest insured unemployment rates for the week ended January 14 were New Jersey (2.5%), Rhode Island (2.4%), Alaska (2.3%), Minnesota (2.2%), California (2.1%), Massachusetts (2.1%), Puerto Rico (2.1%), Montana (2.0%), Illinois (2.0%), and New York (1.9%). The largest increases in initial claims for unemployment insurance for the week ended January 21 were in Arkansas (+419) and the Virgin Islands (+5), while the largest decreases were in California (-175,582), New York (-4,957), Ohio (-4,396), Georgia (-3,921), and Pennsylvania (-2,700).

Eye on the Week Ahead

There isn't much in terms of economic reports issued this week. The goods and services trade deficit report for December is out this week. The trade deficit narrowed sharply in November, falling $6.3 billion from the previous month. A notable drop in imports led to the lowest monthly trade deficit since July 2020. The Treasury budget rose more than $63.0 billion in December from a year ago. For the first three months of the fiscal year, the deficit sat at $421.4 billion, up from $377.7 billion over the same period in the previous fiscal year.

 

The Markets (as of market close January 27, 2023)

Wall Street ended last week higher on favorable inflation, economic, and corporate earnings data. Investors now must await the Federal Reserve's meeting this week to see whether the Fed will soften its policy of aggressive interest-rate hikes. Fourth-quarter corporate earnings season is wide open with roughly 68% of the companies comprising the S&P 500 reporting earnings ahead of consensus estimates. Each of the benchmark indexes listed here posted solid gains by the end of last week, led by the tech-heavy Nasdaq. Heading into the final two trading days of January, the Nasdaq has gained 11.0%, while the Russell 2000 and the Global Dow are up over 8.0%. Crude oil prices closed the week lower ahead of the upcoming OPEC+ committee meeting coupled with the European Union's ban on Russian oil products. Ten-year Treasury yields inched higher, while the dollar and gold prices slipped.

Tech shares led a stock market rally last Monday ahead of earnings reports from several major technology companies. The Nasdaq gained 2.0%, with the Russell 2000 adding 1.3% and the S&P 500 climbing 1.2%. The Dow and the Global Dow rose 0.8%. Ten-year Treasury yields gained 4.1 basis points, closing at 3.52%. Crude oil prices continued to advance, reaching $81.69 per barrel. The dollar was flat, while gold prices advanced.

The stock rally ended last Tuesday as only the Dow and the Global Dow were able to post modest gains. The Nasdaq and the Russell 2000 slid 0.3%, while the S&P 500 dipped 0.1%. Bond prices advanced, pulling yields lower. Ten-year Treasury yields closed at 3.46%, after falling 5.6 basis points. Crude oil prices ended the day at around $80.10 per barrel, down $1.52 from the previous day. The dollar fell marginally, while gold prices continued to advance, gaining $9.70 to reach $1,938.30 per ounce.

Stocks ended last Wednesday mixed as investors sifted through a boatload of corporate earnings data. The Russell 2000 and the Global Dow eked out 0.3% gains, the Dow and the S&P 500 ended close to where they began, while the Nasdaq dipped 0.2%. The yield on 10-year Treasuries was flat, the dollar slipped lower, while gold prices climbed to $1,946.40 per ounce. Crude oil prices rose marginally to $80.49 per barrel.

Wall Street ended a choppy session higher last Thursday, with each of the benchmark indexes posting gains. The Nasdaq led the charge, adding 1.8%, followed by the S&P 500 (1.1%), the Russell 2000 (0.7%), and the Dow and the Global Dow (0.6%). Ten-year Treasury yields rose to 3.49%. Crude oil prices rose nearly $1.00 to $81.10 per barrel. The dollar inched higher, while gold prices fell for the first time in several sessions.

Stocks reversed course from the previous day, closing last Friday higher. The Nasdaq gained 1.0% to lead the benchmark indexes listed here, followed by the Russell 2000 and the Global Dow, which added 0.4%. The S&P 500 rose 0.3% and the Dow inched up 0.1%. The yield on 10-year Treasuries gained 2.5 basis points to close at 3.51%. Crude oil prices slid $1.60, the first decline in several sessions, closing the week at $79.41 per barrel. The dollar gained marginally, while gold prices fell for the second consecutive day.

Market/Index

2022 Close

Prior Week

As of 1/27

Weekly Change

YTD Change

DJIA

33,147.25

33,375.49

33,978.08

1.81%

2.51%

Nasdaq

10,466.48

11,140.43

11,621.71

4.32%

11.04%

S&P 500

3,839.50

3,972.61

4,070.56

2.47%

6.02%

Russell 2000

1,761.25

1,867.34

1,911.46

2.36%

8.53%

Global Dow

3,702.71

3,927.89

4,004.70

1.96%

8.16%

Fed. Funds target rate

4.25%-4.50%

4.25%-4.50%

4.25%-4.50%

0 bps

0 bps

10-year Treasuries

3.87%

3.48%

3.51%

3 bps

-36 bps

US Dollar-DXY

103.48

101.97

101.92

-0.05%

-1.51%

Crude Oil-CL=F

$80.41

$81.40

$79.46

-2.38%

-1.18%

Gold-GC=F

$1,829.70

$1,928.90

$1,928.20

-0.04%

5.38%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week's Economic News

  • The advance estimate of the fourth-quarter gross domestic product showed the economy accelerated at an annualized rate of 2.9%. GDP rose 3.2% in the previous quarter, after falling 1.6% and 0.6% in the first and second quarters, respectively. Personal consumption expenditures, a measure of consumer spending and a main contributor to GDP, rose 2.1% in the fourth quarter, largely due to a 2.6% increase in spending on services. Consumer spending on goods rose 1.1%. Fixed investment fell 6.7% in the fourth quarter, pulled lower by a 26.7% dip in residential fixed investment. Exports dipped 1.3% in the fourth quarter, while imports fell 4.6%. The personal consumption expenditures price index, a measure of inflation, increased 3.2%, compared with an increase of 4.7% in the third quarter.
  • According to the latest report on personal income and outlays, consumer prices rose 0.1% in December, the same increase as in November. Excluding food and energy, consumer prices increased 0.3%. In December, prices for goods decreased 0.7%, while prices for services increased 0.5%. Food prices increased 0.2% and energy prices decreased 5.1%. From the same month one year ago, prices for December increased 5.0%. Prices for goods increased 4.6% and prices for services increased 5.2%. Food prices increased 11.2% and energy prices increased 6.9%. Excluding food and energy, consumer prices increased 4.4% from December 2021. Also, according to the latest personal income and outlays report for December, personal income and consumer spending slowed from November. Personal income increased 0.2% (0.3% in November), disposable personal income rose 0.3% (the same as in November), and consumer spending (as measured by personal consumption expenditures) fell 0.2% after decreasing 0.1% in November.
  • Sales of new single-family homes increased for the second consecutive month in December, climbing 2.3% over the November pace. However, sales are down 26.6% from December 2021. The median sales price of new houses sold in December was $442,100, while the average sales price was $528,400. Inventory of new single-family homes for sale in December represented a supply of 9.0 months at the current sales pace.
  • The international trade in goods deficit for December was $90.3 billion, up 8.8% from the November deficit. Exports of goods for December were $166.8 billion, 1.6% less than November exports. Imports of goods for December were $257.1 billion, 1.9% more than November imports. The goods deficit decreased 10.2% from December 2021.
  • New orders for manufactured durable goods rose $15.3 billion, or 5.6%, in December. Excluding transportation, new orders decreased 0.1%. Excluding defense, new orders increased 6.3%. Transportation equipment, up four of the last five months, drove the increase, climbing $15.5 billion, or 16.7%. Durable goods orders increased 10.5% in 2022.
  • Regular retail gas prices continued to rise across the country last week, according to the U.S. Energy Information Administration. The national average retail price for regular gasoline was $3.415 per gallon on January 23, $0.105 per gallon above the prior week's price and $0.092 higher than a year ago. Also, as of January 23, the East Coast price increased $0.125 to $3.384 per gallon; the Gulf Coast price dipped $0.120 to $3.092 per gallon; the Midwest price climbed $0.099 to $3.304 per gallon; the West Coast price increased $0.041 to $4.008 per gallon; and the Rocky Mountain price advanced $0.142 to $3.434 per gallon. Residential heating oil prices averaged $4.706 per gallon on January 23, $0.108 above the previous week's price and $1.035 per gallon more than a year ago.
  • For the week ended January 21, there were 186,000 new claims for unemployment insurance, a decrease of 6,000 from the previous week's level, which was revised up by 2,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended January 14 was 1.2%, an increase of 0.1 percentage point from the previous week's rate. The advance number of those receiving unemployment insurance benefits during the week ended January 14 was 1,675,000, an increase of 20,000 from the previous week's level, which was revised up by 8,000. States and territories with the highest insured unemployment rates for the week ended January 7 were New Jersey (2.5%), Rhode Island (2.4%), Alaska (2.3%), Minnesota (2.3%), California (2.2%), Massachusetts (2.1%), Montana (2.1%), Puerto Rico (2.1%), Illinois (2.0%), and New York (1.9%). The largest increases in initial claims for unemployment insurance for the week ended January 14 were in California (+3,867), Kentucky (+2,599), Puerto Rico (+713), Virginia (+698), and Maryland (+446), while the largest decreases were in New York (-17,408), Michigan (-5,504), Georgia (-4,823), Wisconsin (-4,055), and New Jersey (-3,822).

Eye on the Week Ahead

The Federal Open Market Committee meets at the beginning of the week. Most observers suggest the Fed will raise interest rates by 50 basis points, although recent economic indicators have shown inflationary pressures are slowing, which could prompt a slowdown in rate hikes. Also out this week is the January employment report. Job growth has been relatively steady over the past 12 months, with 223,000 new jobs added in December.



Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI, Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). News items are based on reports from multiple commonly available international news sources (i.e., wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Forecasts are based on current conditions, subject to change, and may not come to pass. U.S. Treasury securities are guaranteed by the federal government as to the timely payment of principal and interest. The principal value of Treasury securities and other bonds fluctuates with market conditions. Bonds are subject to inflation, interest-rate, and credit risks. As interest rates rise, bond prices typically fall. A bond sold or redeemed prior to maturity may be subject to loss. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 largest, publicly traded companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. The U.S. Dollar Index is a geometrically weighted index of the value of the U.S. dollar relative to six foreign currencies. Market indexes listed are unmanaged and are not available for direct investment.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2023.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Market summaries contain information on the Dow, S&P 500, NASDAQ, Russell 2000, Global Dow, Federal Funds interest rate, and 10-year Treasury yields, as well as highlights of past and future economic data.